Lehman Brothers Bankrupt

September 15, 2008 12:00:00 AM PDT

by T.J. Winick

Washington D.C., USA --

Wall Street heavyweight Lehman Brothers is now filing for chapter 11 protection. Lehman Brothers and Merrill Lynch, both Wall Street legends, and both history as of Monday morning. Merrill is being bought out by Bank of America and the 158-year-old Lehman is filing for chapter 11 bankruptcy.

A local reporter caught up with Lehman employees leaving its Seventh Avenue headquarters Sunday night. Many were carrying personal possessions: plants, company trophies, photos.

At one point there was a possible buyer for Lehman but the deal fell through . In a tailspin from the 14 month credit crisis, the firm couldn't overcome its $60 billion dollars in real-estate holdings gone bad.

"Lehman like so many other investment banks really got caught up in the housing bubble and, like every bubble, the bubble ended and now we're seeing the downside of that bubble," said Hugh Johnson, Chief market Analyst with Johnson Illington Advisors.

And there is more bad news: the world's largest insurance company, American International Group, was also forced into a restructuring. Former Fed Chair Alan Greenspan describes what's happening on Wall Street as "probably a once-in-a-century event."

"There's no question that this is in the process of outstripping anything I've seen, and it still is not resolved and it still has a way to go," said Greenspan on "This Week with George Stephanopoulos."

To prevent a worldwide panic on stock and other financial exchanges, a global consortium of banks announced a $70 billion pool of funds to lend to troubled financial companies.